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International Finance

When doing business internationally, an important part to monitor is the current exchange rate, which is the rate between two currencies by which one will be exchanged for the other.   Exchange rate differences will create a separate gain or loss just for trading the necessary currency in order to do business with other countries.  As a rule, gain or losses related to foreign exchange need to be accounted for properly.
Do you need help with an international finance issue?  Contact a local international finance professional in your area.

Exchange rates are determined by the market.  There are spot exchange rates for currency traded on the spot and forward exchange rates for currency being traded in the future.  Also a there are different buying rate and selling rates where the buying rate is the rate at which trading companies will buy foreign currency, and the selling rate is the rate at which they will sell it. Also, different rates exist for different types of transactions such as wire transfers, traveler’s checks, and credit card purchases.

The following are topics associated with international finance:

  • Exchange Rates
  • Stock and Financial Markets
  • International Trade
  • Double Taxation
  • Overseas Investment Act of 2005
  • Risks
International Trade has suffered since the economic downturn, according to the Division of Investment and Enterprise.  The countries that have the most international trade in terms of money are Europe, the US, and China each trading over $3 billion a year.  For companies, international trade is usually more costly than domestic trade due to the tariffs, shipping costs, and any unexpected costs.  Another difference between domestic and international trade is that labor cannot be readily traded, so trading is mostly restricted to physical products and very rarely can capital, labor or other factors of production be traded internationally.

Although US citizens may still choose to set up offshore trusts, they are thought of by legislation to be similar to an investment configuration and should not be double taxed.   Many investors claim gain as passive income, so that the gains from higher-yielding international investments can be taxed on the same basis as domestic investments and avoid double taxation. This usually means having an LLC or LLP, which is usually un-taxed in the offshore jurisdiction, and which are treated as fiscally transparent by the IRS.

Find out more information about international finance by contacting a professional. Find a local international finance professional in your area.